We work closely with individuals and businesses managing international tax, and I’m often asked whether the UK’s statutory residence test leaves any room for nuance.
After all, it’s supposed to be a straightforward, rules-based approach, but life isn’t always that tidy, is it?
The recent Court of Appeal decision in Taxpayer v HMRC [2025] EWCA Civ 106 offers a timely reminder that even in the world of tax, context matters.
So, what actually happened?
This case involved a taxpayer who had moved to Ireland but returned to the UK multiple times during the 2015/16 tax year. The reason? Her sister was suffering from severe mental health issues, and she was stepping in to help.
She spent 50 days in the UK during that year, but argued that some of those days should be disregarded under the statutory residence test, because she was dealing with exceptional circumstances.
Initially, the First Tier Tribunal agreed with her. The Upper Tribunal didn’t. But now, the Court of Appeal has stepped in and restored the original outcome.
As someone who supports clients making international moves or managing operations across borders, I think this case raises some important questions.
Can moral obligations count as ‘exceptional’?
According to the Court of Appeal, yes.
One of the key takeaways from the ruling is that a strong moral obligation, such as caring for a seriously ill family member, can count as an exceptional circumstance.
The test now considers whether a reasonable person in the same situation would feel compelled to stay.
This is an important clarification.
It shows the courts are willing to factor in real-life pressures that don’t fit neatly into legal or logistical boxes.
Are we moving toward a more human-centred approach to tax residence?
What does this mean in practice?
If you or your employees travel frequently or live across borders, the decision offers some reassurance: the rules aren’t entirely inflexible.
However, the burden of proof remains squarely on the individual. Each day you seek to disregard must be backed up with solid evidence.
So, how do we prepare for situations we don’t see coming?
Here’s what I suggest:
- Keep meticulous records. Emails, text messages, medical notes, and travel documents can make all the difference.
- Be proactive. If something unexpected comes up, whether it’s a family emergency or a global disruption, speak to your adviser early.
- Track your time in the UK closely. Even if exceptional circumstances apply, there’s still a 60-day cap on disregarded days each tax year.
And for businesses?
If you employ internationally mobile staff, revisit your global mobility policies.
Do your employees know what to do if they are caught up in a personal emergency?
Are you offering timely advice before things become contentious with HM Revenue & Customs (HMRC)?
Planning a move abroad? Supporting a team spread across borders?
We’re here to help you. Contact us today for assistance and to plan with confidence.